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Economics · Oct / Nov 2016 · Paper 13 · Question 13

2281Types of markets

Why is a firm in perfect competition a price taker?

  1. AIt has no information about market price.
  2. BIts output is too small to have any effect on market equilibrium.
  3. CThere are few barriers to entry.
  4. DThere are only a few firms in the industry.

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Correct answer: B. Its output is too small to have any effect on market equilibrium.

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